ESCROW AGREEMENT
AGREEMENT, dated June 10, 2002 by and among NEW YORK HEALTH CARE, INC.
("NYHC"), a New York corporation with its principal place of business located at
0000 XxXxxxxx Xxxxxx, Xxxxxxxx, XX 00000, THE BIO BALANCE CORP. ("Bio Balance"),
a Delaware corporation with its principal place of business located at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, XX 00000 and SCHEICHET & XXXXX, P.C. ("Agent"), a New
York professional corporation with its principal place of business located at
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000.
W I T N E S S E T H
WHEREAS, Bio Balance and NYHC have entered into a Stock For Stock Exchange
Agreement dated October 11, 2001 providing for the exchange of equity shares and
other matters (the "Exchange Agreement"); and
WHEREAS, an amendment to the Exchange Agreement provides that Bio Balance
will deliver to the Agent the sum of $100,000 (the "Escrowed Property"); and
WHEREAS, Bio Balance and NYHC have asked the Agent to establish an escrow
for the receipt and disbursement of the Escrowed Property in accordance with the
terms and conditions of this Escrow Agreement; and
WHEREAS, the Agent is willing to act as Escrow Agent in accordance with the
terms and conditions of this Escrow Agreement;
NOW, THEREFORE, in consideration of the benefits to be derived from this
Escrow Agreement and of the representations, warranties, conditions and promises
hereinafter contained, Bio Balance and NYHC and the Agent hereby enter into this
Escrow Agreement as of the date first written above, on the terms and conditions
contained herein and, in connection therewith, agree as follows:
ARTICLE I. ESCROW.
1.01 Appointment of Escrow Agent.
Bio Balance and NYHC hereby appoint the Agent and the Agent hereby agrees
to serve as Escrow Agent pursuant to the terms of this Escrow Agreement. Bio
Balance agrees that it will pay the sum of $100,000 (the "Escrowed Property") to
the Agent on the date of this Escrow Agreement for the Agent to hold and dispose
of only in accordance with the terms and conditions of this Escrow Agreement.
1.02 Operation of Escrow.
The parties hereto agree that the escrow created by this Escrow Agreement
(the "Escrow") shall operate as follows:
(a) All of the Escrowed Property shall be paid to the Agent and
deposited in a special account (the "Escrow Account").
(b) The Escrowed Property shall be held by the Agent in the Escrow
Account,subject to the provisions of Article 1.03(f) and 1.03(g), until the
earlier of the closing of the Exchange Agreement or the cancellation and
termination of the Exchange Agreement.
(c) If the closing of the Exchange Agreement is completed and Bio
Balance shall have prior to closing received gross proceeds from its
currently pending private placement of Bio Balance equity securities of
less than $6,000,000, the Agent shall, promptly after its receipt of
written confirmation from both NYHC and Bio Balance, deliver all of the
Escrowed Property to NYHC by a check drawn on the Escrow Account, subject
to collection.
(d) In the event the Agent does not receive the written confirmation
described in Article 1.02(c) above, and has received written notice from
both NYHC and Bio Balance that either (i) Bio Balance has received gross
proceeds of not less than $6,000,000 from its currently pending private
placement of equity securities and that the closing of the Exchange
Agreement has taken place, or (ii) the Exchange Agreement has been
cancelled and terminated, the Agent shall deliver all of the Escrowed
Property to Bio Balance in accordance with its instructions after receipt
of such written notice, by a check drawn on the Escrow Account subject to
collection.
1.03 Further Provisions Relating to the Escrow.
(a) Distribution by the Agent shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of any party to this
Agreement (other than the distributees) in and to the Escrowed Property
distributed and shall be a perpetual bar both at law and in equity against the
parties to this Escrow Agreement and against any person claiming or attempting
to claim such distributed Escrowed Property from, through, or under such party.
(b) NYHC agrees to reimburse the Agent for the Agent's reasonable fees and
other expenses incurred by the Agent in connection with its duties hereunder.
(c) NYHC and Bio Balance agree, jointly and severally, to indemnify and
hold harmless the Agent against and in respect of any and all claims, suits,
actions, proceedings (formal or informal), investigations, judgments,
deficiencies, damages, settlements, liabilities and legal and other expenses
(including legal fees and expenses of attorneys chosen by the Agent, including
but not limited to its employees and of counsel), as and when incurred arising
out of or based upon any act, omission, alleged act, or alleged omission by the
Agent or any other cause, in any case in connection with the acceptance of, or
the performance or non-performance by the Agent of, any of the Agent's duties
under this Escrow Agreement, except as a result of Agent's bad faith or gross
negligence. The Agent shall be fully protected by acting in reliance upon any
notice, advice, direction, other document, or signature believed by the Agent to
be genuine, by assuming that any person purporting to give the Agent any notice,
advice, direction, or other document in accordance with the provisions hereof,
in connection with this Escrow Agreement, or in connection with the Agent's
duties under this Escrow Agreement, has been duly authorized so to do, or by
acting or failing to act in good faith on the advice of any counsel retained by
the Agent. The Agent shall not be liable for any mistake of fact or of law or
any error of judgment, or for any act or any omission, except as a result of the
Agent's bad faith or gross negligence.
(d) The Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any property, security or other document
or instrument held by or delivered to the Agent.
(e) The Agent shall have no duties or responsibilities except those
expressly set forth herein. The Agent shall not be bound by any notice of a
claim, or demand with respect thereto, or any waiver, modification, amendment,
termination, cancellation, or revision of this Escrow Agreement, unless in
writing and signed by the other parties hereto and received by the Agent and, if
the Agent's duties as Escrow Agent hereunder are affected, unless the Agent
shall have given its prior written consent thereto. The Agent shall not be bound
by any assignment of any of the parties' respective rights hereunder unless the
Agent shall have received written notice thereof from the assignor. The Agent is
authorized to comply with and obey laws, rules, regulations, orders, judgments
and decrees of any governmental authority, court, or other tribunal. If the
Agent complies with any such law, rule, regulation, order, judgment, or decree,
the Agent shall not be liable to any of the parties hereto or to any other
person even if such law, rule, order, judgment, regulation, or decree is
subsequently reversed, modified, annulled, set aside, vacated, found to have
been entered without justification, or found to be in violation of or beyond the
scope of a constitution or a law.
(f) If the Agent shall be uncertain as to the Agent's duties or rights
hereunder, shall receive any notice, advice, direction, or other document from
any other party with respect to the Escrowed Property which, in the Agent's
opinion, is in conflict with any of the provisions of this Escrow Agreement, or
should be advised that a dispute has arisen with respect to the payment,
ownership, or right of possession of the Escrowed Property or any part thereof
(or as to the delivery, nondelivery, or content of any notice, advice,
direction, or other document), the Agent shall be entitled without liability to
anyone, to refrain from taking any action other than to use the Agent's best
efforts to keep safely the Escrowed Property until the Agent shall be directed
otherwise in writing by both other parties hereto or by an order, decree, or
judgment of a court of competent jurisdiction which has been finally affirmed on
appeal or which by lapse of time or otherwise is no longer subject to appeal,
but the Agent shall be under no duty to institute or to defend any proceeding,
although the Agent may, in the Agent's discretion and at the expense of NYHC and
Bio Balance as provided in Section 1.03(c), institute or defend such
proceedings.
(g) The Agent is authorized, if the Agent is threatened with litigation or
is sued, to interplead all interested parties in any court of competent
jurisdiction and to deposit the Escrowed Property with the clerk of the court.
(h) The Agent's responsibilities and liabilities hereunder, except as a
result of the Agent's own bad faith or gross negligence, will terminate upon the
delivery by the Agent of all the Escrowed Property under the provisions of this
Escrow Agreement.
ARTICLE II. MISCELLANEOUS
2.01 Further Action.
At any time and from time to time, Bio Balance and NYHC each agree, at
their own expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Escrow Agreement.
2.02 Survival.
Subject to Section 1.03(h), the covenants, agreements, representations and
warranties contained in or made pursuant to this Escrow Agreement shall survive
the delivery by the Agent of the Escrowed Property, irrespective of any
investigation made by or on behalf of any party.
2.03 Modification.
This Escrow Agreement sets forth the entire understanding of the parties
with respect to the subject matter hereof, supersedes all existing agreements
among them concerning such subject matter and (subject to Section 1.03(e)) may
be modified only by a written instrument duly executed by each party.
2.04 Notices.
Any notice, advise, direction, or other document or communication required
or permitted to be given hereunder shall be in writing and shall be delivered in
person, by certified mail, return receipt requested, postage prepaid or by
confirmed fax transmission. Each notice, advice, direction or other document or
communication required or permitted to be given hereunder shall be delivered to
the Agent at the address set forth above. The Agent shall provide NYHC and Bio
Balance with three (3) days prior notice of all disbursements from the Escrow
Account.
2.05 Waiver
Any waiver by any party of a breach of any provision of this Escrow
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this Escrow
Agreement. The failure of a party to insist upon strict adherence to any term of
this Escrow Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Escrow Agreement. Any waiver must be in
writing.
2.06 Binding Effect.
The provisions of this Escrow Agreement shall be binding upon and inure to
the benefit of Bio Balance and NYHC and their respective successors and assigns,
and shall be binding upon and inure to the benefit of the Agent and the Agent's
successors and assigns.
2.07 No Third Party Beneficiaries
This Escrow Agreement does not create and shall not be construed as
creating any rights enforceable by any person not a party to this Escrow
Agreement (except as provided in Section 2.06).
2.08 Jurisdiction.
The parties hereby irrevocably consent to the jurisdiction of the state and
federal courts located in the County of New York in the State of New York in
connection with any action or proceeding arising out of or relating to this
Escrow Agreement, any document or instrument delivered pursuant to or in
connection with or simultaneously with this Escrow Agreement, a breach of this
Agreement or of any such document or instrument, or the Escrowed Property.
2.09 Separability.
This entire Escrow Agreement shall be void if any provision of this Escrow
Agreement (other than the second sentence of Section 2.11) is invalid, illegal,
unenforceable, or inapplicable to any person or circumstance to which it is
intended to be applicable, except that the provisions of Section 1.03 shall
survive.
2.10 Headings.
The headings in this Escrow Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Escrow Agreement.
2.11 Counterparts; Governing Law.
This Escrow Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by and construed in accordance
with the laws of New York without giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as
of the date first written above.
A G E N T: THE BIO BALANCE CORP.
SCHEICHET & XXXXX, P.C.
By: /s/ Xxxx Xxxxx
-----------------------------
Xxxx Xxxxx, President
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, a member of the Firm
NEW YORK HEALTH CARE
By: /s/ Xxxxx Xxxxx
-----------------------------
Xxxxx Xxxxx, President
